CMBS delinquencies drop in February

Commercial mortgage-backed securities experienced a drop in delinquencies.

The credit situation for many property management company may be making positive strides, as the commercial mortgage-backed securities delinquency rate fell to its lowest point in 12 months last month.

CMBS delinquencies was at a rate of 9.42 percent during February, which was a drop from the previous month's figure of 9.57 percent, according to a report compiled by Trepp. The figure was more than 90 basis points lower than the peak level of 10.34 percent, recorded last July.

"Regardless of impending spending cuts, Euro uncertainty and dissension at the Fed about the effectiveness of quantitative easing, new issuance and spreads in the CMBS market chugged along in February, keeping up a near record pace," said Manus Clancy, senior managing director of Trepp. "Refinancing volume, along with the steady flow of resolutions in the distressed loan pipeline kept the delinquency rate on its downward trend in February."

The level of loan resolutions was approximately $1 billion last month, the firm's February 2013 U.S. CMBS Delinquency Report noted. In January, the figure was $1.2 billion. Approximately 3,300 of the total outstanding tally of loans are with a special servicer. Nearly $52 billion in loans are considered delinquent by one month or more. However, this does not include loans that are beyond the balloon date, but in-line with interest payment requirements. Newly delinquent CMBS loans totaled $2.7 billion for the month, which was a marginal improvement from the previous period.

When examining sectors, the delinquency rate for retail properties was 7.79 percent in February, unchanged from one year earlier, the report added. The next lowest rate was the lodging market, which was slightly more than 10 percent. The office market had a rate of 10.63 percent, while the industrial market was nearly 11.8 percent. The highest delinquency rate was multifamily, with a figure of 13.27 percent.

Construction levels improve to end 2012
As delinquency rates continue to fall to start this year, the market experienced improving construction conditions to end 2012. The Construction Backlog Indicator from Associated Builders and Contractors did not change in the fourth quarter compared to the previous three months, but it improved nearly 2.5 percent from the fourth quarter in 2011.

The Northeast and South regions experienced increases in construction backlogs during the final quarter of the year, the report added. The West and Middle States experienced a slight drop in the figure.

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